Skip to main content

tv   Mad Money  CNBC  February 23, 2012 11:00pm-12:00am EST

11:00 pm
pradaxa is progress. if you have afib not caused by a heart valve problem, ask your doctor if you can reduce your risk of stroke with pradaxa. i'm jim cramer, and welcome to my world. you need to get in the game. firms are going to go out of business and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere, and i promise -- >> "mad money", you can't afford to miss it. >> hey, i'm cramer. welcome to "mad money". welcome to cramerica. other people want to make friends. i'm trying to save you some money. my job is not just to entertain, but to coach and teach you. call me at 800-743-cnbc. tonight i come out here to praise the long shot. the odds-off favorite that can be an integral part of your portfolio. of course, i can focus on the averages. decent day.
11:01 pm
dow rising 46 points. s&p gain of 4.3%. nasdaq climbing 8.1%. a rally, thanks to a break-out of the euro, of all things. the heavily bet-against european currency. when it rallies, it helps the earnings of everything from the food and drug stocks to the techs and bank stocks. anyone that does a ton of business in europe, it translates the euros into weaker dollars, giving you big earnings per share gains. we need the euro rally because we need something macro. we need something big and overarching to combat this endless run in oil. up another $1.87 today. going to $147. does that sound familiar? that's where it peaked from lack of demand in 2008. sure, you could have caught some of the nice moves in the dow led by ibm, which is crushing hewlett-packard. it rallied $3.74 today. that was responsible, by the way, for more than half of today's gain in the dow. or you could have nailed maybe the $1.98 brought to you by
11:02 pm
proctor & gamble which finally gave us the restructuring we've been waiting for because we've been so critical of proctor on the show. let's be honest. those gains are small potatoes in the vast scheme of things. so tonight i want to celebrate the big score. [ applause ] >> i want to sing the praises of huge percentage winners that we can obtain together. ♪ hallelujah >> and, yes, i want to salute the stock of vivus. vivus. a biopharmaceutical company that jumped $8.18 today on a $10.55 basis. hey, 77.5% gain on the strength of an fda panel that approved its new weight loss drug. first, though, before we get to that sterling example of a long shot that made good, you mind if we talk horse racing? yeah, you heard me right. horse racing. that's the first bit of betting i cut my teeth on well before i got interested in stocks.
11:03 pm
you see, when i was at harvard my senior year i had a friend from the school newspaper. he was the sports editor. he had been taught how to handicap by andy beyer. famous racing writer. he more famously dropped out of my alma mater playing ponies. except beyer he wasn't playing anything. as hard as it may be to believe, he was investing in handicapping, picking winners. that was the name of his first book, one that inspired me to think about long shots in the stock market. made me a ton of money. my handicapping class taken at suffolk downs race track for no credit but a lot of cash. consisted of learning how to spot a horse that was undervalued or misvalued. the horse that had a far more likely chance of winning than the betting public realized. meaning, it paid off better, higher odds, than the others if it did win. in order to handicap, you needed to hone a particular set of skills. everything from looking for enough, but not too much, lather on the horse in the paddock, to how it did under various weather conditions to its performance in really out of the way tracks that no one was paying attention to.
11:04 pm
out of the way fda panels that many weren't paying attention to. obviously, not all these traits, particularly whether a horse is a mudder, are germane to the topic of stock picking, but the essence of the exercise sure was. i was taught not to pick the favorites. not to pick the proctors or the ibms. why? the risk for those were abysmal. put down $10 to win $12? that is proctor. that's proctor ahead of an important conference. that's buying ibm if you listening to david faber's new interview this morning. i'm feeling bad with whitman with that too daunting task. why aren't those favorites as good as the long shot? because of the proctor and ibm, you got to put up a lot of capital, and you are hoping for a small gain. you may come back empty-handed. i want to contrast that with this long shot vivus. here's the suffolk downs race track analysis of this biotech. you have a company that's going
11:05 pm
before an fda panel for a pill that can combat obesity, which we know is a scourge of epidemic proportions in this country. now, all the so-called smart money had already decided ahead of this panel's confab that no diet drug could get the fda's blessing. the last one was a huge bust. plus, we know weight loss pills have side effects. side effects that can bring entire companies to their knees, like the once-mighty american home products that was almost brought down by the fen-phen products. that's why the smart money guys were viewing this vivus as a loser, but they didn't have the benefit of superior suffolk downs education. let me show you how they should have handicapped this long shot. they should have been thinking, okay, you have an fda meeting on a drug that has been pretty well vetted. it's got the hope of stemming the tide of the obesity epidemic, and you got to believe that the epidemic is so overwhelming now that the thing could be approved. some would say that vivus's
11:06 pm
situation was binary. meaning that while you could make a lot if the drug was approved, you could also lose a lot if it wasn't. now, i question that logic. binary would be vvus, that's the symbol if you want to take a look at it. that the binary would be have been vvus had run up massively into this meeting. in reality, though, the stock hadn't done much for years. didn't actually seem to have that much more downside than a rip-up at the track. meaning a small ante that could pay up big. that was that horse that nobody really cared about. kind of glue factory thing. meanwhile, you could feel the pressure on the fda to offer something to the desperate souls out there who have nothing else, nothing else that could be taken to lose weight. obesity wasn't an epidemic the last 13 years ago in 1999. it wasn't. now it's like captain trips in cramer fave novel "the stand." so what do we have? how about a classic example of informed speculation where you could make a $10 bet that pays off more than $8.
11:07 pm
wager ten to make 18? wow. at one point you had a double. daily double. why am i going through this exercise? why spend all this time talking about an obscure small cap drug company where the money has already been made? because it's the best example i know of diversification. i know. gray beards will say you are out of your mind, but i want you to be genuinely diversified. not faux diversification. genuine. i need you to have a bunch of stock. different stock eggs in many different baskets. that way you can't be crushed by 2008, 2009. how many people in bank of america were wiped out? how about the tech bottom or the oil crash like the mid 1980s? the best way to get yourself involved and excited about managing your money is to reserve one of those diversification slots in your portfolio for speculating on a horse that might be radically undervalued, like vvus. let me be clear. you could have found this one just by examining the broader
11:08 pm
obesity landscape and the outside chance of being approved as the betting lines are posted. here's the bottom line. let vvus's gain today be a lesson to all of us. you need a portfolio that has an apple. or an ibm. trouncing hewlett-packard. you need an oil or master limited partnership to win, and even if it should lose at the pump. how about a retailer or financial or healthy bluechip of which vivus is not. you also need a long shot. the calculated play that seems miscalculated going in. got to search for the next vvus. we do it every friday on the show. every friday we search for the next vvus. you have to make some room in your portfolio for when you find them. otherwise, you're overlooking the gifts this market is giving to speculators who are willing to go to the out of the way tracks, do the homework, and pick up massive gains. not just the incremental ones. i need to go to leon in pennsylvania. leon. >> caller: boo-yah, jim. good to talk to you, my friend. >> good to have ow the show.
11:09 pm
>> caller: i have one of the stocks we spoke about a while ago. proctor & gamble. they came out with some news today. $10 billion in savings for job cuts, better supply chain management, and more efficient marketing spin. i want to know how -- do you think they can execute this? >> yes. yes. this is what i've been waiting for. i needed them to get out of that food business and get rid of pringles. proctor is going to be back. i'm going from weak hold to strong buy, proctor & gamble. steve in maryland. steve. >> caller: b-b-b boo-yah, baby. okay, jim. back to business. >> give me a national bohemian beer and we'll answer the question. >> caller: okay. this action to block verizon's multibillion dollar deal to buy wireless airwaves. it's killing me, i'm telling you. killing me, jim. do you think it will get blocked, and should i stick with verizon? >> what's the matter with verizon?
11:10 pm
what do you like verizon for? the ceo of that company is terrific. it's got a great yield and good prospects. i have no beef with verizon. i think you should own verizon. i think t is cheaper than verizon right here. vvus reminded me of an important lesson that i learned at suffolk downs, my original stock market. it's the beauty of the long shot. you want your portfolio to have a photo finish, find the inner speculator in yourself. only for one-fifth of your portfolio. "mad money" will be right back. >> coming up, cloud nine. investors are sending sales force sky-high after reporting a better than expected quarter. can it continue to fly, or will it soon come back down to earth? get your earnings edge with
11:11 pm
have the bears licking their chops. should you have reservations? or is it time to pull up a chair? cramer is setting the table in his exclusive with their ceo just ahead. plus, commodity collapse. with coal on the rocks and the oversupply of nat gas keeping it down, cramer is zeroing in on one energy play where bulls may be turning a blind eye on some real problems. is it lurking in your portfolio? find out when jim sends it to the sell block. all coming up on "mad money".
11:12 pm
immerse yourself in all over relief [ female announcer ] feeling that flu all over your body? with alka seltzer plus. it's specially formulated to speed relief to every inch of you. liquidate your flu symptoms with alka seltzer plus.
11:13 pm
tspark card from capital one... spark cash gives me the most rewards of any small business credit card. it's hard for my crew to keep up with 2% cash back on every purchase, every day. 2% cash back. that's setting the bar pretty high. thanks to spark, owning my own business has never been more rewarding. [ male announcer ] introducing spark the small business credit cards from capital one. get more by choosing unlimited double miles or 2% cash back on every purchase, every day. what's in your wallet? this guy's amazing.
11:14 pm
11:15 pm
tough to be the king because if you disappoint on just one metric, they storm the palace and cut off your head.
11:16 pm
that's what happened to last time when it reported back in november, and the company beat the estimates of every metric except for billing. it wasn't fast enough to satisfy the growling bears. next day the stock lost 10% of its value. listen, at that point we talked to the ceo that night, and he reassured us about the company's long-term strength. did anybody listen? well, lately they have because salesforce has been on a tear, rising 25% so far. now, salesforce just reported tonight and the company delivered a true blow-out better than expected quarter. it reminded me of the old days. a 3 cents earnings beat off a 40 cents basis with stronger than anticipated revenue that rose 38.3% year-over-year. that's accelerated revenue growth. better, sales force knocked it out of the park in the area where they disappointed last year. deferred revenue. that increased the phenomenon over a year ago leaving the estimates in the dust. okay. people wanted more information from the company last time.
11:17 pm
they got it. they were wowed about it. there's no comeback, by the way. sales force never left the throne. no one it's big in after hours trading. let's go to the visionary ceo and long one of the show's favorite money makers. to hear about the quarter and what's going on forward, welcome back to "mad money". >> hey, great to be here, jim. it's a gorgeous day in san francisco. >> well, the release that you put out is gorgeous, so let's just say it mirrors the atmosphere. all right, mark. before i get to the minutiae that drives hedge funds, i want to talk about what your business is doing that it could have accelerated revenue growth. i am searching for companies that have what i call arg. i used to see it at google. >> i know. >> there's four or five companies that have it. how after the $2 billion mark are you able to go to the $3 billion mark with accelerated revenues? is it new products or new customers? is it larger deals? what did it? >> the thing that's doing it, jim, is this dramatic transformation that's underway in our industry, which is the move to social, mobile, and cloud. and these three --
11:18 pm
>> the trinity. >> the trinity. they're completely disrupting the existing industry, and all the players that were able to really benefit from the old industry have basically been put to the side and new players, like, have really risen up because of social, mobile, and cloud, and as you know, because we've talked about this so many times over the last few years, that we've rebuilt all of our systems on to our social platform we call chatter. we've rebuilt all of our systems into a mobile framework, and, of course, we started -- we were born cloud. >> right. >> i can tell you we've been reborn social. it's been an incredible time at >> you are going to have to for people who either don't use facebook, the classic social, or are trying to figure out how a corporation is interested in something that is facebook-like. are you doing missionary work? are you going to companies and saying, look, we can rip out what you have and for a fraction of the cost, we can do all the trinity? or is everyone dying for the
11:19 pm
trinity, and you are just plugging it in? >> companies need to become social enterprises. we've talked about that before. you can look at our major customers -- coca-cola, general electric, dupont, even facebook uses to run their operations. that is, the fundamental systems that they interoperate with their customers, with their employees, and in many cases even their products, they're using our platform to make that happen. >> all right. what were they using before? you don't have to mention any names, but i'm trying to figure out. i want people to know -- you and i have talked before. i want people to know what it means to bring you in and what it does to their sales force and how they talk among each other and how everyone knows what everybody else is doing and why that matters. >> well, you know, in the old way, jim, you would go to oracle, microsoft, sap. you would buy this old software. you would have to install it, upgrade it, maintain it. it would really slow down your ability to innovate. it would really impair your cost structure because of the amount of risk that you take on. in fact, still, jim, many, many
11:20 pm
companies do that today. i think to their detriment. >> right. >> the next generation companies, the companies that i just spoke of, the ones who have really amazing revenue growth like we do, they're all built on the cloud, jim. the cloud is where innovation is happening. that's why forbes rated us the most innovative company in the world. we give you the ability to go faster in your organization. that's what the cloud does. >> now we get into what i regard as the minutiae, but others regard as the fundament. here's what i was taught to do at school, which is a parsing of the two reports. i've got fiscal third quarter. all right. all you bears, i got that. i got the fourth quarter, and i am seeing a break-out that you said that may not even be necessary that you have given us on deferred revenue, and you have -- i was looking for 32% increase in deferred revenue. that was the number that everyone claimed that made it so you should sell the stock. you did 48%. explain to people why 48% means
11:21 pm
so much and also tell me how did you get so much better than 32%. >> well, jim, you probably remember on our third quarter conversation -- and i'm going to be the same way on this conversation -- i have never been more excited about, and, you know, i'm not a stock trader. you know, i run a software company. >> right. >> what i focus on is making customers successful, and what i have seen and the reason that you see kind of the run-up in deferred and what deferred revenue means is it's the backlog of business that we have not yet recognized. you know, we operate like a cable company. we sign deals, but until we deliver the service, we don't recognize the revenue. that deferred tends to run as we sign up more and more deals. and this was just a great quarter. i mean, we signed some incredible transactions, and we signed really, well, absolutely our largest transaction of all time, so it was an amazing quarter. >> are you allowed to talk about it? >> oh, yeah.
11:22 pm
we closed an unbelievable transaction at hewlett-packard, for example. it was our second largest deal of all time, and even in our first quarter, jim, since we've -- that we're in now, we just signed our first nine digit transaction. this has been an incredible time for salesforce. >> which brings me to the last point here. you gave us unbilled deferred revenue. you have never broken that out before. you are talking about it ending the fiscal year of $2.2 billion up from $1.5 billion. unbilled deferred. what does that mean? >> well, jim, that is what you asked for in the last quarter. >> i'm just -- >> you said -- you said, mark, you have to roll out some more numbers that give us more clarity to the backlog because what happens with, of course, you see this incredible revenue growth. i mean, 37% for the year. 38% for the quarter. you see this incredible cash flow number, but these are all deals that we signed, you know, years ago, jim, that are just paying out now, so you wanted more clarity to what happens in
11:23 pm
the quarter because, you know, that's kind of the nature of the call. okay. what happened in the quarter? we give out a certain number of numbers. you know, like deferred revenue, revenue, cash flow. the numbers i thought was important. but, you know, we want to continue to open up, open the kimono even farther and give more numbers, and that's what this number offers. >> my friends at oracle tell me they're the cloud company and they somehow this quarter supplanted you as the cloud company. >> you know, jim, i'm all in favor of oracle. i think it's a great company. i used to work there myself. i love s.a.p. and microsoft. i don't know what cloud customers any of them have. i can show you, and you know, hey, let's go talk to g.e., facebook, coke, dupont, you know, hewlett-packard now. you name it. we have hundreds of thousands of customers who are using's system in the cloud, and this quarter we passed s.a.p. as the second
11:24 pm
largest provider now of crm in the world. software or cloud. >> amazing. >> that was a huge accomplishment, and now we're targeting number one, and you know who they are. >> yes, i do. mark, i do greatly appreciate that you gave us that additional data, which you know i felt the heat from by not having, and i really think it was a great quarter. no flies on it. well done, mark benioff, >> thanks, jim. great to see you. >> great to see you. >> guys, look, i asked for a series of data points because i felt that people weren't able to get their arms around how well the sales force is doing. we now know to get the data points, and it turned out to be much better than expected, and the stock is reacting with alacrity because we have that data. crm. stay with it. stay with cramer. >> coming up, reservation renaissance? open table's footprint continues to grow, but concerns over competition have the bears licking their chops. should you have reservations? or is it time to pull up a chair? cramer is setting the table in
11:25 pm
his exclusive with their ceo just ahead. . . . . this new at&t 4g lte is fast. hey. did you guys hear... ...that mary got engaged? that's so 42 seconds ago. thanks for the flowers guys. [ both ] you're welcome. oooh are you guys signing up for the free massage? [ both ] so 32 seconds ago. hey guys you hear frank's cat is sick? yeah, we heard. wanna sign the card? did you know the guys from china are in the office...
11:26 pm
[ speaking chinese ] [ male announcer ] stay a step ahead with the 4g lte galaxy s ii skyrocket. only from at&t. ♪ i heard they found energy here. it's good. we need the jobs. [customer:] we need to protect the environment. [worker:] we could do both. is that possible? [announcer:] at conocophillips, we're helping power america's economy with cleaner, affordable natural gas. more jobs. less emissions. a good answer for everyone. well, if it's cleaner and affordable. as long as we keep these safe. there you go. thanks. [announcer:] conocophillips.
11:27 pm
then don't get nickle and dimed by high cost investments and annoying account fees. at e-trade, our free easy-to-use online tools and experienced retirement specialists can help you build a personalized plan. and with our no annual fee iras and a wide range of low cost investments, you can execute the plan you want at a low cost. so meet with us, or go to for a great retirement plan with low cost investments. ♪ i got to know something.
11:28 pm
are high octane stocks coming back? last year all things were brutally annihilated. since the beginning of 2012 lots of left for dead stocks -- we need to know if the momentum is the real deal are, or will the stocks break our heart again. take open table. the company made it possible to book restaurant reservations on-line, including mobile. open table is still the leader here. installed system in just under 50% of north american restaurants. the company is also moving into the u.k. and germany. i think this company is riding a fantastic secular trend. people increasingly use the web to do things they used to have to do over the phone. the stock has been a roller coaster. after coming public at 20 in may of 2009, they had a fabulous run. going straight up until it peaked at $115 in april of last year, and then the stock went down just as abruptly before bottoming in the low 30s in november. some of the decline is due to worries about competition, which became especially keen when google required zagat. whether that was real competition or not we'll talk about. open table discontinued spotlight. it was a hyped daily deal offering where customers could
11:29 pm
buy a $40 restaurant voucher for 50% off. they also had some issues integrating its acquisition of top table. they acquired it in september of 2010. i think most of the decline came to the fact that momentum stocks went out of style last year in a big way. market became a very unforgiving place for turbo charged growth stories. same thing happened to netflix. green mountain coffee. just like these other once and future momentum names, lately open table stock has been coming back. it's up 45% from its lows in november. can this rally be sustained? let's check in with matt roberts, president and ceo of open table. find out more about his company and its future prospects. mr. roberts, welcome to "mad money". >> thanks for having me. >> thank you so much. you heard my introduction. i'm struggling how to value the company. when i look at this and read the conference calls, the growth is phenomenal. it's phenomenal. there are people that say, hey, wait a second, it's not as phenomenal as it once was. you have 50% of the restaurants. they can't expect you to have 150% of the restaurants. speak to me about where you are
11:30 pm
in the trajectory of open table for both restaurants and for the for the consumer. >> we have tremendous amount of growth opportunity ahead of us. on adding restaurants, when we look at our target market, we think that virtually all of the reservations are using an electronic solution. it's a better way to run your business. just like they've all moved from a physical cash register to an electronic point of sale system. we have plenty of growth opportunity in restaurant side of the equation. on the diner side, even more growth opportunity there. only 12% of restaurant reservations happened on-line last year. only 12%. we think at least a majority will happen on-line at some point in the future. >> now, one could argue that that first 50% was easy to get because those are doctors and they're savvy. the other 50% of the people are in the dark ages and don't understand the power of technology? >> it's more a function of it takes a long time to build up this supply of restaurants.
11:31 pm
you have to knock on one door at a time. it's really about getting to those restaurants. it actually becomes easier to sell in a market the longer we've been in a market. >> okay. >> it's a nice network effect in that regard. >> now, we talk a lot about gasoline prices going out of control, and the impact on restaurants. are fewer restaurants opening because of the higher price of gas? are fewer consumers going out? >> we have been doing this a long time. we've seen a number of cycles in economic and gas prices. we've never seen a correlation between gas prices and our ability to add new restaurants to the network. >> now, you have an overseas big push. a lot of people concerned because if we break out north america, you are making a ton of money. suddenly, over to europe, and you are not. you are investing. okay? it's almost like if there were two companies, we would pay $100 for north america for growth and momentum, and we pay nothing for europe, but you are signing up people in europe. you are signing up marquee names. >> absolutely. absolutely. we're getting great momentum, particularly in the u.k. where we purchased, which is a leading consumer
11:32 pm
destination site there. we're marrying it with our best of breed technology, and the solution is really resonating with some very marquee names. >> give me a marquee name. >> gordon ramsey, for example, just signed up all of his restaurants in the u.k., and many more will join. we like our position and our combination of the destination site and the technology for both the diners and the restaurants in the u.k. market. >> now, your monthly subscription fee, $199. have you had to discount? >> $199 is our base price. most people add on services on top of that. we average around $250 to $255 per particular store. >> the spotlight, it was just too competitive. groupon came in. living social. wasn't worth it? >> i think it's less competitive versus it didn't really resonate with our target customers. >> okay. >> so we look for opportunities to add value and solutions that actually do resonate with them. >> i know from the younger generation, my daughter, that she would only do it mobile. >> yes. >> how many people are doing it
11:33 pm
mobile versus doing it from, you know, desk top? >> we've seen significant growth there too. now 16% of all of our seats filled are actually on our mobile platform. we have seven different types of applications. i think at some point at least a majority of reservations will happen on the mobile platform and even versus the desk top. >> stock took a big hit when google bought zegat. i look at your filings. they're partners with you. >> exactly. it's actually -- most people don't understand that they're actually partners. that the reservation functionality both of them are powered by open table. >> okay. now -- >> by the way, it's only 5% to 10% of our business. >> now, when someone books with you, okay, and they cancel, why don't you charge them a fee if they do it within the last hour? if i have an 8:00 reservation and cancel at 7:00, shouldn't -- if it's a hotel, they'll hold me to something. if it's a doctor, they'll hold me to something.
11:34 pm
so why -- airlines hold me. why shouldn't restaurants hold me? >> our solution really takes the advantage of the same things that the phone does. we really can't add another layer of complexity versus the phone if we're hoping to have adoption of on-line versus the phone. i think that's really the answer. the nice thing about our solution is actually it makes it easier for people that cancel versus just not showing up at the restaurant. that's truly costly for them if they just don't show up. >> our mutual friend on your board said, jim, i finally went with this because people don't want to pick up the phone and say, i'm sorry, i'm not coming, but they'll do it on a computer. europe does have -- there's a competitive element to europe, right? there is another guy who is going at it versus you guys, and how are they doing versus you just in terms of head-to-head? >> if you look across europe in general, germany, there's still a very competitive dog fight going on. in the u.k. that combination of top table, which is the leading consumer destination and open table is the winning combination in the u.k.
11:35 pm
>> this is matt roberts, president and ceo of open table. it's a billion dollar company with a much bigger market than the market cap, and i think sometimes you have to think about the market cap. not so much about the minutiae because the market cap is too small to address how big the opportunity is for open table. matt roberts, president and ceo of open table. thank you so much. >> thank you, jim. >> stay with cramer. >> coming up, ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid fire on the lightning round. and later, commodity collapse. with coal on the rocks and the oversupply of nat gas keeping it down, cramer is zeroing in on one energy play where bulls may be turning a blind eye on some real problems. is it lurking in your portfolio? find out when jim sends it to the sell block. all coming up on "mad money". [ horn honks ]
11:36 pm
hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business.
11:37 pm
11:38 pm
it is time -- it is time for the lightning round. ♪ >> buy, buy, buy. >> sell, sell, sell.
11:39 pm
>> play until this sound, and then the lightning round is over. are you ready skee-daddy? time for the lightning round. we want to start with jameson. i may visit jameson later tonight. jameson in texas. jameson. >> caller: b-b-b boo-yah, jim. >> johnny walker black boo-yah to you, my friend. >> caller: i have one for you. wft. weatherford international. what do you think? >> in the book jim cramer's real money, also available in about 100 different languages, what you do find is i have a chart that says accounting irregularities equal sell, and they got accounting irregularities up the wazoo so i say sell, sell, sell. let's go to paul in arizona. paul. >> caller: how are you, jim? >> not bad, paul. how are you? >> caller: hey, can you give me -- well, greetings from middle of nowhere arizona. give me your opinion on a pharmaceutical. sounds like it might have
11:40 pm
promise for that nasty pancreatic cancer, ticker thld. >> you know, the other day chelsea therapeutical -- there's a lot of companies working on pancreatic cancer. classic speculation that you should be involved in. it kills a lot of people every year, and if somebody finds something for it, it's going to go up a lot more than that stock is. i bless that speculation. as long as you qualify it as a speculation. let's go to rosemary in missouri. >> caller: hey, jim. a big cardinal boo-yah to you and a hug. >> i'm going to give you a missouri is going to be my number one bracket name boo-yah when it comes to march madness. >> caller: hey, great. >> i'm telling people right here. >> caller: i'm new at this, and my stock is agnc, and it's american capital agency. >> i've endorsed that company. i do prefer nly, but i do know that we have been around the block, and that yield is good, and they keep paying it, and i think it's good.
11:41 pm
it's going to be -- it's a good stock to own. let's go to ed in massachusetts. ed. >> caller: jim. a big east coast exit boo-yah to you. >> i like that. i'm not blaming you. you're from massachusetts. what do you have? >> caller: how do you like astra zeneca? >> even that 8% yield does not tempt me, frankly. it's just a bond at this point. it's a high yielding bond. i do not like it. they've got to come up with some growth, man. they are one hurting cowboy. let's go to alan in big missouri. alan. >> caller: boo-yah from hillsborough, missouri. >> hillsborough? >> caller: down from st. louis. >> fantastico. >> caller: i would like your thoughts on quick silver. >> man, i got all excited because i thought you were talking about quick silver resources. an interesting bottoming play. you are talking about -- no, you're talking about the apparel quick silver, and i will tell you once, i will tell you a million times. that is too hard for me. other than snowboarding, i like
11:42 pm
-- i like the dude stuff. it makes me feel young. way too hard for me in terms of the stock. oh, no. don't tell me that is the conclusion of the "lightning round." [ buzzer ]
11:43 pm
11:44 pm
11:45 pm
♪ >> just because somebody is a professional doesn't mean they know what they're talking about. we've all seen this in our everyday lives. who has gone to a doctor who turned out to be a quack? who hired a contractor who turned out to not know what they were doing? the same is true of the stock market. on wall street we have analysts by the truck load, people whose only job is to evaluate and recommend stocks. i don't want to be too broad brush here. even the good ones can make mistakes. that's the nature of the game. there are a bunch of institutional problems with wall street research in general. these are systematic issues that
11:46 pm
can often cause your broker to give you really bad advice. that's why you have to take every sell-side analyst recommendation with a grain of salt, or perhaps a whole box of morton's iodized. case in point, consol energy. cnx. it's a coal miner which also produces natural gas. two commodities that have been hammered to oblivion and beyond. basically this one company gives you exposure to the awful coal environment and the worse than horrific natural gas market. perfectly encapsulating everything that's wrong in the world that isn't named greece or iran. yet, consol is universally beloved by the analysts. of the 29 firms that cover the stock, 25 rated it buy. only four said it is a hold. not one says it is a -- sell, sell, sell. it's all about the worst two trends i follow in america. to me that seems like a serious oversight. that's why i'm correcting this collective mistake of the analysts, and i'm putting
11:47 pm
consol in the sell, sell, sell, sell block. >> the house of pain. >> i guess that makes me a big contrarian, but telling you to sell consol is actually one of the easier calls i've made on the show. coal and natural gas are in the doghouse, so consol should be there right with them. when you understand the weaknesses in the commodities, you understand why this stock is a very difficult stock to own. we have talked about the horrible state of the natural gas market a lot on the show lately. fuel simply so abundant in this country and there's been so much drilling that the supply of gas has overwhelmed the demand. now we're talking about blocking its export. it's all bottled up here, ladies and gentlemen. that is why oil and gas producers like eog and chesapeake and cabot oil gas have all decided rachet down the nat gas drilling budgets. we had the ceo of eog resources. he painted a very grim picture. it even frightened this guy, and i believe that natural gas is under a lot of pressure. i asked him had natural gas
11:48 pm
bottomed at $2.50, and here's how he responded. >> i'm not sure i could agree with you that natural gas has bottomed at the current $2.50 price. i mean, i wouldn't be surprised to see it go 50 cents lower sometime during the summer. >> off the $2.50 pace. this is a guy that understands the industry. it gets worse. this guy has been right about everything he says since he has come on the show. i felt like taking gas. how about coal? that's actually the bulk of consol's business. all the coal companies reported truly awful quarters this past earnings season, and many of them, like alpha natural resources and patriot, have announced they're cutting back on their own coal production. actually, a bunch of problems. there are concerns about europe, but mainly because of fears that china might not be able to engineer a soft landing. plus, there's a ton of coal supply coming back on-line in australia. right now, remember, there's big storms there. right now it's helping to depress prices. looking into the future, though, the biggest threat to coal is the incredibly low price of natural gas. with prices at these levels, it
11:49 pm
makes a ton of sense for utilities to switch from coal to gas. that's not even factoring in the obama's epa war on coal. the analysts that cover the coal stocks, they have an overwhelming number of buys, versus a pretty small number of sells. that's exactly what we're seeing with consol. the coal analysts love this stock. hey, best of breed of a bad breed. this gets right to the root of the problem of wall street analysts. typically analysts only cover single sector, and that makes them myopic. no one else has a problem recognizing the weakness in coal. coal guys, they can't see it. that's how a stock like consol that gives you the worst of both worlds, still garners 25 buys, four holds, and zero sales. when the coal analysts look at this one, they see, yes, the best one. it is. it's the largest producer of coal east of the mississippi river with truly high quality coal assets, diversification, and natural gas. not all coal. to them consol is among the best names in the sector, but all that means is consol is the best house located at the
11:50 pm
intersection of two really, really horrible neighborhoods. >> the house of pain. the house of pain. >> who cares that consol is better than any other domestic coal players when the coal market is getting bad? no. getting worse. as for the natural gas side of things, the fact that consol is in the natural gas business is because of a bad decision management made back in march of 2010 when consol decided buy dominion's natural gas exploration production assets in appalachia. what a great deal for dominion. looked cheap, down from nine when exxon bought xto, but it's now down to $2.70. you heard mark. it could go lower. consol seriously overpaid for these assets, and now they're stuck with exposure to the natural gas market, and it's a perpetual house of pain. no end in sight. one more thing, you own this stock, and the president is re-elected, look for some sort of carbon tax that could deck these guys, and if the house goes democrat, i'm telling you, that's a lay-up. plus, the sierra club seems to be running our environmental policies these days, and now
11:51 pm
they hate natural gas almost as much as coal. i get the bulletins every day. the eco political democratic nexus is totally stacked against this company. the bottom line, the coal analysts rate console a buy because they think it's the best of the bunch, but i think you need to sell this stuff because as long as coal is going lower and natural gas is in the gutter, consol's stock could be going lower too. being the best miner in the coal business is like being the best sailor on the titanic, and this one bears the double burden of also having one foot in the natural gas abyss. i don't care that it's 21 points off its high. it can go lower. don't listen to the analysts. do sell consol. "mad money" is back after the break.
11:52 pm
11:53 pm
11:54 pm
>> lots of winners. one gigantic loser. that's how i feel about old tech. specifically hewlett-packard. every division seems to be in free fall, and the vultures? circling everywhere. we tend to forget that hewlett-packard is a huge sales company that has potential deeply rooted in everything from the corporate market to consumer business, and through printers and personal computers. we also tend to forget that even big companies can get into tailspins. some which they never recover from. witness the stunning declines over the years in research in motion, nokia, and, yes, the
11:55 pm
late and unlamented nortel. could it be the next name on that list of losers? the company has a tremendous amount of debt and tremendous amount of capital that was foolishly spent on buying back shares at higher prices. considerably higher. the previous ceo leo apotheker spent money like a drunken sailor. including an overpay for an information management software company autonomy that really drained the corporate coffers, and right before he was kicked out, he announced that hewlett-packard was debating abandoning the personal computer business. that was great for business, right? why should i get my computer for them, they're going to discontinue it? you have a company that looks like food for the crows. seems like hewlett-packard is about to be carved up by ibm, oracle, s.a.p., accenture, and the consulting side, and by dell on the low cost asian companies and the pc and printing side. now under meg whitman, the new ceo. she has a pristine reputation, but whitman's actual operating history at her previous employer ebay was distinctly mixed. she had grave trouble taking that company to the next level. she also made a serious blunder when she came into
11:56 pm
hewlett-packard, painting an extremely rosy picture of the business before she even had a handle on it. stock crept up in part because we figured she had to know something about how well the company was doing, or she would have just kitchen sinked, meaning taking huge write-offs and cleaned up the biggest mess and blamed all the bad stuff on her predecessor and given herself some time. maybe it takes as long as ten years. today what did she offer? perhaps a vision of a value-added software consulting company? given the crowded nature of that field with powerhouses already staking out the turf, good luck with that. a vision of cost cutting? it seems that the previous ceo has done well. he cut costs to the bone. he also made a featherbed during his miserable regime, but i think the biggest problem is it's under invested, not over invested. she paid lip service to the need to innovate. i don't know if they have the money to do it. what does she know about innovation.
11:57 pm
hewlett-packard is a giant colossus that has become a helpless giant. too big to be taken over. too hobbled to be broken up. too lifeless to advance. i would stay away from the stock. i would buy some of its competitors. something that started with today's beautiful ibm break-out. i expect the vultures won't just be circling. they'll soon be chowing down. ♪ our machines help identify early stages of cancer and it's something that we're extremely proud of. you see someone who is saved because of this technology, you know that the things that you do in your life, matter. if i did have an opportunity to meet a cancer survivor, i'm sure i could take something positive away from that. [ jocelyn ] my name is jocelyn, and i'm a cancer survivor. [ mimi ] i had cancer.
11:58 pm
i have no evidence of disease now. [ erica ] i would love to meet the people that made the machines. i had such an amazing group of doctors and nurses, it would just make such a complete picture of why i'm sitting here today. ♪ [ herb ] from the moment we walked in the front door, just to see me -- not as a cancer patient, but as a person that had been helped by their work, i was just blown away. life's been good to me. i feel like one of the luckiest guys in the world. ♪
11:59 pm
♪ ♪ [ male announcer ] offering four distinct driving modes and lexus dynamic handling, the next generation of lexus will not be contained. the all-new 2013 lexus gs. there's no going back.


info Stream Only

Uploaded by TV Archive on